In 2022, according to preliminary numbers, Romgaz recorded an operating revenue increase of 124% YoY, OPEX growth of 171%, and a gross profit of RON 3.01bn, an increase of 39% YoY.
Romgaz has published select preliminary 2022 results, as well as the 2023 budget, as part of the material for the OGSM, to be held on 20 February 2023. According to the document, in 2022, Romgaz achieved an operating income of RON 13.6bn, which is an increase of 124% YoY. Of course, as Romgaz is the largest gas producer in Romania, the majority of this revenue came from gas sales, which increased by 129% YoY and amounted to RON 11.6bn. The other noteworthy category to record an increase is the revenue from electricity sales, which increased by over 3x and amounted to RON 1.33bn.
Moving on to OPEX, it is expected to amount to RON 10.77bn, representing an increase of 171% YoY. In fact, even though growth was recorded across all expense categories, by far the largest increase was recorded in taxes, duties, and similar payments category, which increased by over 3x YoY and amounted to RON 8.15bn. This category includes the windfall tax, solidarity contribution, and other royalties/taxes which are implemented on the energy/electricity prices above certain levels, and due to the prices we have seen in 2022, this isn’t surprising.
Moving on to the 2023 budget, the Company based its revenue projection based on the forecasted evolution of gas demand and delivery price, gas, and electricity production programs, underground gas storage of own gas, as well as the revenues of Iernut Power Plant Branch (SPEE Iernut). Furthermore, they expect income to be generated from other activities, such as the supply of services to third parties.
Operating income is estimated at RON 10.32bn, representing a decrease of 24% YoY. 86% of this income is expected from gas sales, 4% from electricity deliveries, 2% from in-house works capitalized as non-current assets, and 8% from other operating income. The revenue estimates for gas from own production were determined by the gas quantities that are estimated to be delivered to customers in 2023 as well as the avg. delivery price of gas from current production. A reduction in the prices of gas as well as the lower demand due to high storage levels led to a decrease in demand. Romgaz estimated that in 2023, 75% of production delivered to clients shall be sold at a regulated price of RON 150/MWh.
Financial income is expected to amount to RON 84.1m, mostly generated by dividends distributed by Depogaz and the interest for the loan granted to Romgaz Black Sea Limited. Operating expenses are estimated at RON 7.6bn in 2023, a decrease of 29% YoY. Of this, the largest percentage goes to Taxes, duties, and similar payments, at 55% of the total, followed by other OPEX at 18%, staff costs at 14%, and expenses with goods and services, at 13%. The main driver, Expenses with taxes, duties, and similar payments, was estimated at RON 4.18bn, of which, the largest categories are the following: RON 2.2bn for the windfall tax contribution, RON 1.04bn for the royalty calculated from the physical production, and RON 906m for the solidarity contribution. Expenses with goods and services are estimated to grow by 29% compared to preliminary 2022 results, staff cost growth is estimated at 20%, while other OPEX is estimated at 42%. Finally, the gross profit is estimated at RON 2.58bn. Romgaz also briefly commented on its forecasts for 2024 and 2025. They estimated that the total income will amount to RON 13.6bn in 2024, and RON 14.7bn in 2025. Total expenses are estimated at RON 9.92bn in 2024, and RON 12.1bn in 2025. Finally, A gross profit of RON 3.69bn is forecasted for 2024, while RON 2.54bn is estimated for
Romgaz summary of key indicators (2022-2025, RONm)
Source: Romgaz, InterCapital Research
Romgaz also briefly commented on its 2023 investment program, through which they proposed a total budget of RON 2.29bn, of which, RON 1.97bn will be allocated to investments, while RON 325m will be used for credit reimbursements. 2023 profit distribution was also mentioned, with the rate for dividends at 50%, and the remaining allocated for development. If you would like to read the whole report, click here.